Stealth nonprofit

AT A TIME WHEN low-income housing projects all over town are being gentrified into luxury apartments, trying to preserve a Belltown project inhabited by poor senior citizens and disabled people seems a futile cause. It doesn't help when the group wanting to buy the building was founded by an organization whose current chair is a Nordstrom and whose board of directors features top brass from Microsoft, Seafirst, Weyerhaeuser, and high-stakes developers Sellen Construction and Wright Runstad & Co.

Related Content

Yet housing activists proved last month that futile causes can sometimes be worth adopting. "We won. This is amazing," Tenants Union organizer Siobhan Ring said after state officials stalled plans by the nonprofit Housing Resources Group (HRG) to upscale the Security House, a 107-unit, low-income building at Fourth and Bell. HRG wants to back out of a federal Section 8 contract that since 1977 has provided subsidized housing to more than 100 enfeebled people earning less than one-third of the median Seattle income. Freed of that layer of regulation, HRG could raise rents 20 percent on more than a third of Security House's units. The state Department of Community, Trade & Economic Development, however, doesn't like the idea. On November 24, agency officials told HRG that unless the organization can prove that Security House would lose money as a Section 8 building, HRG's request for a $1.5 million state grant would be rejected.

The activists' victory—still not completely assured—flies in the face of a daunting trend. Security House is one of 72 low-income developments in Seattle whose long-term Section 8 subsidies are scheduled, because of Republican-inspired budget cuts, to expire within the next 18 years. By 2016, more than 3,600 apartments reserved for the poor, the elderly, and the disabled could be lost. Many have already been absorbed by the private market—394 units in eight developments citywide, to be exact, including 366 apartments in six downtown projects. (See "Out in the Cold," SW, 1/21.)

When Security House owners Doug Buck and Lars Jonsson agreed to sell the 13-story building to the Housing Resources Group last spring, many residents assumed—wrongly, in hindsight—that HRG (which is nominally a nonprofit) would continue the Section 8 contract. That's what the Low Income Housing Institute, another Seattle-based nonprofit housing provider, pledged to do as part of its purchase offer to Buck and Jonsson, but its offer was snubbed in favor of HRG. Business and family ties may have influenced that decision: Jonsson is married to Laurie McDonald Jonsson, the millionaire Democratic Party patron whose real estate investment company, Stellar International, serves as headquarters for Pine Street Development, orchestrator of the taxpayer-subsidized Nordstrom­Pacific Place retail complex. McDonald Jonsson is a close adviser of Gov. Gary Locke, whose 1996 campaign was chaired by Jay Reich, the prominent Preston Gates & Ellis attorney who helped assemble the financing package for the Pacific Place parking garage. Buck, Security House's other co-owner, is married to Bobbie Lindsay, who works as a spokes-person for Pine Street Development.

MEANWHILE, BLAKE NORDSTROM currently chairs the Downtown Seattle Association, an influential business-lobbying organization that created the Housing Resources Group in 1980. Though generally viewed as being responsive to Seattle's low-income housing challenges, HRG has been criticized for serving a clientele that approaches middle-class status. The group's corporate-dominated board may be part of the explanation. The panel includes several top executives, including Washington Mutual senior vice president Bob Flowers. It was Flowers colleague and WaMu executive Lee Lannoye who last summer stronglyopposed the state's decision to ban the type of taxpayer-backed loan Pine Street Development obtained to build the Pacific Place garage.

In an ironic twist—and a rare loss for the powers that be—state housing director Bill Hunter, who locked horns with Lannoye over the Pacific Place decision, was instrumental in shaping last month's HRG-adverse Security House ruling. More ironic still, Hunter recently earned the housing chief's job by beating out Bussey Nutley, head of the state agency that sponsored the $47 million, low-interest loan to the parking garage developers.

IF PERMITTED TO DROP Security House's Section 8 contract, HRG staffers say they'll increase the rent on 39 of the building's 107 apartments by 20 percent. This could push some fixed-income recipients beyond their financial limits. HRG would also drop a potential renter's minimum age from 62 to 55. And some units would be made available to still younger tenants, despite HRG executive director Jim Ferris' pledge in a recent "Dear Friend" letter to "maintain the building for low-income seniors."

The whole issue could become moot: Without the $1.5 million state grant, Ferris says the group may have to back out of the deal. That could open the door for another nonprofit—perhaps one willing to maintain the Section 8 contract.

Whatever the outcome of this dispute, there is no question that the trend downtown is against Section 8 and its beneficiaries and in favor of well-heeled interests bent on spreading gentrification. A few blocks south of the Security House, the Oxford Apartments at Second and Virginia has been completely privatized. The new owner of the 50-unit building, Deep Water Investments, allowed the Oxford's Section 8 contract to expire November 30. Deep Water is a client of Kidder, Mathews & Segner, a Seattle-based real estate firm that has also worked on behalf of Amazon.com, Boeing, Fred Meyer, PACCAR, Port of Seattle, and Weyerhaeuser (including its real estate subsidiary, Quadrant). Kidder Mathews executive Jeffrey Wysong, listed in state documents as Deep Water's managing partner, promised that no current Oxford tenants would be evicted. (Left unaddressed was the obvious: that tenants would be forced by increased rents to evict themselves.) Wysong wouldn't discuss the company's future plans for the building—and he withheld the names of Murky . . . er, Deep Water's silent partners. Wysong said he sympathized with low-income tenants, but defended his company's decision to purchase and privatize the Oxford, explaining grandiloquently, "It's the United States of America."